Alibaba Group Holding Ltd. (NYSE: BABA) has sold off its Chinese department store chain Intime and the transaction is set to cost the conglomerate $1.3 billion in losses. Chinese media reports say that Alibaba’s decision to divest Intime is part of a company-wide effort to overhaul its entire business portfolio and focus on just e-commerce.
Last month, Alibaba unveiled a strategy that would see the e-commerce giant integrate its international and domestic e-commerce platforms into one business unit headed by one leader. This would be the first time all of Alibaba’s numerous e-commerce platforms are run as a single business unit.
Alibaba has faced significant competition in both domestic and foreign markets from online retailers that offer heavy discounts. While Alibaba platforms still attract millions of buyers every month, their market share is steadily being eroded by these discount-heavy sellers.
PDD Holdings subsidiaries Temu and Pinduoduo, as well as TikTok and ByteDance’s Douyin, have been a major thorn in Alibaba’s side in recent years thanks to their steep discounts. These platforms use rock-bottom prices across most product lines to attract budget-conscious customers, making it difficult for Alibaba to compete without also cutting prices, a move that will eat into the firm’s profits.
Alibaba is reportedly selling Intime to a consortium made up of Youngor Fashio and the department store chain’s management team. The conglomerate has owned Intime for around 7 years after initially purchasing it in 2017 for $2.6 billion in a bid to expand into physical retail. With Alibaba holding a 99% stake in Intime, it will lose $1.3 billion in the sale.
According to Reuters, Alibaba has plans to sell additional consumer sector assets, including retailer RT-Mart and Freshippo, its grocery business, to focus exclusively on online retail. Alibaba also shut down its cloud operations in Australia and India a few months ago as it sought to focus on its core business, e-commerce.
The firm’s expansion into brick-and-mortar retail occurred under former CEO Daniel Zhang’s leadership. During this expansion, Alibaba acquired physical retail chains such as RT-Mart’s parent company and hypermarket operator Sun Art Retail as well as Suning, a massive non-government retailer based in Nanjing, Jiangsu, China.
Most of Alibaba’s e-commerce and commerce platforms are feeling increasingly pressured amidst dampening consumer demand and rising competition, unfortunately. As a result, the conglomerate is focusing all its attention on e-commerce and selling off all other business concerns that aren’t related to e-commerce.
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